analysis Turning $10,000 into $1,000,000 in 6 Years of Domaining

[Ategy]

As many of you know, I'm constantly confronting and challenging people about how the math behind their portfolio will not lead them to profits. When I do so it's because I actually DO THE MATH as opposed to many who just blindly guestimate.

Obviously when it comes to domaining there's as much art as their is science. Having a few years under your belt might not make you an industry expert, but at least at that point after making several sales you're able to generalise and categorise domains well enough to make approximate long-term averages ... and from that we can then develop a detailed portfolio projection based on math.

I've posted more details as well as charts with actual numbers over at NameCult. but just as a bonus for NamePros members, here are the raw numbers behind a couple of projections discussed in the article.

If you'd like me to post a personalised alternate projection based on your own variables (or numbers you're curious about), then please post in the comments at NameCult or in the following NamePros thread.
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/#post-7614555

Full article ... [Namecult]


Example #1: $1,000,000 in 6 Years.

Example #2: $1,000,000 in 10 Years.

Original article: http://namecult.com/turning-10000-into-1000000-in-6-years-of-domaining/

 

[Brands.International]

As many of you know, I'm constantly confronting and challenging people about how the math behind their portfolio will not lead them to profits. When I do so it's because I actually DO THE MATH as opposed to many who just blindly guestimate.

Obviously when it comes to domaining there's as much art as their is science. Having a few years under your belt might not make you an industry expert, but at least at that point after making several sales you're able to generalise and categorise domains well enough to make approximate long-term averages ... and from that we can then develop a detailed portfolio projection based on math.

I've posted more details as well as charts with actual numbers over at NameCult. but just as a bonus for NamePros members, here are the raw numbers behind a couple of projections discussed in the article.

If you'd like me to post a personalised alternate projection based on your own variables (or numbers you're curious about), then please post in the comments at NameCult or in [this thread right here at NamePros .. placeholder link .. please wait a few minutes].

Full article ... [Namecult]


Example #1: $1,000,000 in 6 Years.
Show attachment 143416


Example #2: $1,000,000 in 10 Years.
Show attachment 143417


Original article: http://namecult.com/turning-10000-into-1000000-in-6-years-of-domaining/

Based on a thread title I was thinking I am going to read about how you made 1 mil from 10k investment in 6 year, and got really excited, only to find out a ... predictive math model

 

[BrandEntrance.com]

I also buy lottery tickets. We are a gambling nation so domaining suits me fine as well.

 

[nothere]

Models are useless here, no offense.

 

[alcy]

man u just literally took the word FUN out of domaining

no but seriously, logic truly is the slayer of soul

 

[Ategy]

Based on a thread title I was thinking I am going to read about how you made 1 mil from 10k investment in 6 year, and got really excited, only to find out a ... predictive math model

lol .. I'm only 3 years in .. and my model isn't quite what's there. Plus I spend too much time making the daily lists at NameCult and super long posts like this one to actually get my portfolio organised enough to sell optimally (still had a profitable 2019 though .. lol).

But yeah .. this obviously isn't for those who truly understand the fundamentals of their portfolio, but so many new people just don't understand the basic math behind their portfolio. People often don't understand that they need to sell at over 100x multiples to be profitable when working with domains in the 1% sell-through per year range.

So I did some complex tinkering on Excel so that I could instantly pull out the numbers for just about any variable if anyone wants ... if anyone wants me to do one for them, please post here:
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/

Models are useless here, no offense.

The ones I posted likely aren't comparable to your own model (which hopefully you already know). But everybody should know the numbers behind their own domain business. The one I set up was indeed a fun headline grabbing portfolio projection, and in the article I say very clearly it's not just theoretical, but also that domaining is both science AND art (which can't be converted into math .. or at least not without a lot more time and resources than I have .. lol). More importantly, I also show a path to failure (one of MANY). Ultimately no single path is "the right path" as long as you're profitable.

But at the same time having a tool like this is great to see how tweaking your pricing can potentially affect you long term bottom line.

man u just literally took the word FUN out of domaining
no but seriously, logic truly is the slayer of soul

Now now .. lol .. as I mentioned, there's tons more to domaining than math and science. Plus this is just THEORY .. the realities of domaining are a lot more random and complex! Ironically enough because of those facts, I'm aware that making this projection system indeed is more for FUN than anything else! .. Feel free to go to the other thread and suggest some fun fantasy numbers! .. I asked people to wait for the more crazy requests, but I'll make an exception for you!
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/

 

[WhoaDomain.com]

I also buy lottery tickets. We are a gambling nation so domaining suits me fine as well.

funny how these domains are registered below lol

domainersanonymous.com
domaingambler.com
domaingamblers.com
domaingambling.com
domainbet.com

and many more.

 

[WhoaDomain.com]

lol .. I'm only 3 years in .. and my model isn't quite what's there. Plus I spend too much time making the daily lists at NameCult and super long posts like this one to actually get my portfolio organised enough to sell optimally (still had a profitable 2019 though .. lol).

But yeah .. this obviously isn't for those who truly understand the fundamentals of their portfolio, but so many new people just don't understand the basic math behind their portfolio. People often don't understand that they need to sell at over 100x multiples to be profitable when working with domains in the 1% sell-through per year range.

So I did some complex tinkering on Excel so that I could instantly pull out the numbers for just about any variable if anyone wants ... if anyone wants me to do one for them, please post here:
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/





The ones I posted likely aren't comparable to your own model (which hopefully you already know). But everybody should know the numbers behind their own domain business. The one I set up was indeed a fun headline grabbing portfolio projection, and in the article I say very clearly it's not just theoretical, but also that domaining is both science AND art (which can't be converted into math .. or at least not without a lot more time and resources than I have .. lol). More importantly, I also show a path to failure (one of MANY). Ultimately no single path is "the right path" as long as you're profitable.

But at the same time having a tool like this is great to see how tweaking your pricing can potentially affect you long term bottom line.




Now now .. lol .. as I mentioned, there's tons more to domaining than math and science. Plus this is just THEORY .. the realities of domaining are a lot more random and complex! Ironically enough because of those facts, I'm aware that making this projection system indeed is more for FUN than anything else! .. Feel free to go to the other thread and suggest some fun fantasy numbers! .. I asked people to wait for the more crazy requests, but I'll make an exception for you!
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/

Super Long Posts? Pissh Posh! have you seen my posts Ategy? lol

 

[Bob Hawkes]

Thanks for putting the time into these @Ategy , and in addition being willing to run other numbers if people propose them. Paul Nicks presented results of a somewhat similar model at NamesCon 2019. His model had slightly higher per domain acquisition costs, and slight changes in other parameters, so break even was 4 years in as I recall.

Of course the key point is whether a sell through rate of 1 to 1.5% with an average net sales price of $2500 to $2850 is realistic. At least for early years, it seems optimistic to me, perhaps.

I think having a business plan and annually checking if you are on track is essential. Models such as the one you created is an important part of such a plan and monitoring.

Thanks again,

Bob

 

[Lox]

Your mindset is running on dual 10 GHZ processors! Keep it that way

Regards

 

[Tia Wood]

I think it's interesting and will be following along for shits and giggles. I feel a math model is way better than the strategy a lot of people go with lol.

 

[Tia Wood]

I like your charts but I feel a lot has to go right in order to pull it off with the main issue of not buying crap domains and knowing sales. Perhaps make that clear in case new domainers are reading it.

 

[Ategy]

Of course the key point is whether a sell through rate of 1 to 1.5% with an average net sales price of $2500 to $2850 is realistic. At least for early years, it seems optimistic to me, perhaps.

100% AGREED !!!

I cannot stress enough that these are business model and THEORETICAL portfolio projections.

The truth is that the vast majority new domainers fail to reach even anything close to a 0.5% sell-through.

More important than any math is knowing what domains to acquire *AND CRUCIALLY* at what prices. You have to get domains that have a good chance of selling at a low enough price so that it averages out into a portfolio projection that ends in the black (or in the green with my sheets above .. lol).


A guaranteed way to fail is by looking at a random portfolio projection and then buying 5 domains a day thinking you'll hit the same profits.

What I don't discuss here (because it's infinitely more complex) is actually knowing what domains have what probability of selling (average sell-through rate) and at what price (your sales multiples is equally important as your sell-through rate).

So in theory @nothere isn't wrong in saying projections are useless ... because if you know what your (theoretical) numbers actually are, then you'll never be able to make an accurate projection. BUT .. there's the rest of NamePros for learning about the fundamentals of how to value domains! lol

I think it's interesting and will be following along for sh*ts and giggles. I feel a math model is way better than the strategy a lot of people go with lol.

Honestly .. the biggest reason I created this was to see how wild the numbers can get. Feel free to propose your own (real or fantasy) variables here:
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/

 

[nothere]

I think it's interesting and will be following along for sh*ts and giggles. I feel a math model is way better than the strategy a lot of people go with lol.

No strategy need, other than a bank account. He assumes that a $25 name he registers will be sold for $2500 or more. Nice try. If this was the case there's a lot of money out there, they'd flock to this model to make 100X their investment in 6 years.

 

[JB Lions]

Why are there 2 threads? - https://www.namepros.com/threads/tu...in-6-years-of-domaining.1175266/#post-7614623

 

[Tia Wood]

He assumes that a $25 name he registers will be sold for $2500 or more.

That's true. Sales like that are more rare. But's just a numbers/math experiment anyway.

 

[meslam479]

A few numbers in my mind
first year average Number of Domain Acquisitions "2" with Sell-Through Rate of "1.2" then every year growth follow the numbers below to represent the curve of learning in the first year.
- Number of Domain Acquisitions per Day "5"
- Average Acquisition Cost (including renewal for expiring domains) "$19.47"
- Average Renewal Cost "$8.47"
- Sell-Through Rate (per Year) "2"
- Average Sale Price "$2995"

 

[Ategy]

No strategy need, other than a bank account. He assumes that a $25 name he registers will be sold for $2500 or more. Nice try. If this was the case there's a lot of money out there, they'd flock to this model to make 100X their investment in 6 years.

Actually .. that's not too far from my business model. I'm heavy in closeouts that I flip often at more than 100x.

Until recently my portfolio was a colossal mess in terms of organisation. I only had about 30% of my domains listed at afternic (some not even priced), and about 10% at Sedo (none priced). So last year my sell-through rate was actually under 1% .. but I sold multiple sub-$25 acquisitions in the nid to high four figure range.

As I get my portfolio listed more, based on my 2019 numbers (then accounting for the fact I was only being about 30% effective), I'll be safely over 100x AND safely over 1%.

That being said .. there are very few people who go as deep into the daily lists as I do. There are most certainly gems to be found at closeout. Nothing I'll sell for 6-figures, but there's nothing wrong with a steady stream of $x,xxx sales when your acquisition costs are low like mine!

 

[Bob Hawkes]

@Ategy you ask for those to suggest other numbers.
I would be interested in seeing what your model shows for

• keeping acquisition costs average $25,
• assume renewal $9 (since increases on way),
• 0.75% sell-through, and
• $900 net average sale (I base this on $1000 gross 10% commission).
• Assume one acquisition every other day.

Thanks,
Bob

Edit I realize you want these in the other thread. Will put them there.

 

[Ategy]

A few numbers in my mind
first year average Number of Domain Acquisitions "2" with Sell-Through Rate of "1.2" then every year growth follow the numbers below to represent the curve of learning in the first year.
- Number of Domain Acquisitions per Day "5"
- Average Acquisition Cost (including renewal for expiring domains) "$19.47"
- Average Renewal Cost "$8.47"
- Sell-Through Rate (per Year) "2"
- Average Sale Price "$2995"

@meslam479 .. What progressive changes to the variables are about 2 generations away .. lol. For now here's one based on your stable (and very optimistic numbers). With this projection you hit $1,000,000 in 5 years and 5 days!

Why are there 2 threads? - https://www.namepros.com/threads/tu...in-6-years-of-domaining.1175266/#post-7614623

As I mentioned above ... one's for the original article (back at NameCult) and discussing the theory and math etc. This one is just for people to give me numbers to plug into my spreadsheet so that I can give people their own personalised portfolio projection!

 

[ExploitOdds]

No strategy need, other than a bank account. He assumes that a $25 name he registers will be sold for $2500 or more. Nice try. If this was the case there's a lot of money out there, they'd flock to this model to make 100X their investment in 6 years.

Doesn't he say that there are other variables to consider? If you and or I, or anyone for that matter . . . were skilled enough in seeing what types of names will be down the road, or seeing trends, we all would sell our names for more money. If that were true we might buy fewer names, but make more money . . . which would be a variable that actually would make his model look pedestrian . . . thought it looks aggressive to me!

 

[Ategy]

. . . thought it looks aggressive to me!

If you read the article, I actually lead with the 10 year 1% @ $2500 model. I'll be the first to agree that a 1.5% sell through with those other numbers is aggressive. But as @Tia Wood and others have pointed out .. this is more just to look and explore (and laugh at in some cases) at the numbers.

This isn't really about any one specific projection. The only reason I made the headline was because I was just playing around with my spreadsheet and at one point noticed an almost exactly -$10,000 inflection point and thought it would make a good headline. But in the end this is more simply about knowing your own numbers and developing your own business plan and projections accordingly. There's a lot of math and science in domains .. but there's also a great deal of things that could never be jammed into a spreadsheet.

 

[bmugford]

I appreciate the numbers, but there is a big difference between business theory and practice.

It is easy to put any numbers on a piece of paper without really considering any number of issues, such as scaling.

I do think it is a good idea though that people do data analysis on their actual numbers, to make sure they are on the right track.

Brad

 

[Bob Hawkes]

@Ategy you ask for those to suggest other numbers.
I would be interested in seeing what your model shows for the following that I might regard as realistic for someone starting out.

• keeping acquisition costs average $25,
• assume renewal $9 (since increases on way),
• 0.75% sell-through, and
• $900 net average sale (I base this on $1000 gross 10% commission).
• Assume one acquisition every other day.

Thanks,
Bob

 

[johnn]

Too difficult to make it from $10,000 to $1,000,000